How to Use a Stop Limit Order to Cover a Short Position
I got this question the other day:
When you short a stock at 30.00 and you want to place a stop limit in case it jumps up past your max loss of say, 31.00, how exactly is that order entered (everytime I try to do this, it sells (Ed: he means buys) my stock immediately - I’m doing something really wrong). Do I put a limit price of 31.00 and a stop price above that, i.e. 31.50 (thus saying it’s ok to repurchase any shares between 31.00 and 31.50)?
This is one of the trickier orders to place. In that situation you would want to enter a buy stop limit order (buy on stop with a limit). The …
tagged: Covering-Shorts, Limit-Orders and Stop_Loss_Orders
